UPDATE 1-Tereos says most of large Brazil sugar stocks already sold

(Adds comments, context on Brazil sugar production and stocks)

NEW YORK, Oct 29 (Reuters) - French sugar maker Tereos SA , which has a large operation in top producer Brazil, believes that a big part of historically high sugar stocks currently sitting in Brazilian warehouses has already been sold and would be shipped soon.

Gustavo Segantini, sales director at Tereos’ Brazil unit, said at an international conference on Thursday that there is not a lot of sugar yet to be sold in Brazil in the moment, foreseeing a tight domestic market in the country in the between-harvest period from December to March that could lead to record local prices.

Brazil, the world’s top producer and exporter, has sharply increased sugar output in the current season as the ethanol market crashed due to stay-at-home measures to deal with the pandemic.

Mills in the country’s center-south region have flexibility to adjust production between sugar and ethanol, depending on prices and demand. Giving priority to sugar, they are on track to produce an all-time high volume of 38 million tonnes in the current crop, 9 million tonnes more than a year earlier.

Consultancy Datagro, the conference’s organizer, estimated Brazil sugar stocks at 13.8 million tonnes by the end of September, 27% more than at the same time in 2019. That volume, however, is mostly sold, according to the Tereos director.

Segantini said the export market continues very active, with mills closing forward foreign sales quickly, and Brazilian food and drink processors should rush to buy sugar to avoid being squeezed by tight supplies as the current crop winds down.

A sharp devaluation of Brazil’s currency this year of more than 40% against the dollar boosted commodities exports. As a result, the country has run out of basic food stuff such as soybeans and rice. The global sugar supply, however, is seen balanced since the pandemic reduced out-of-home demand for the product.

Reporting by Marcelo Teixeira Editing by Chizu Nomiyama and Marguerita Choy